Bernard Madoff describes details of fraud, attorney for victims says

Peter Morgan/The Associated Press archiveThe top cop at the SEC resigned after receiving an angry dressing-down before Congress over the agency's failure to detect the massive fraud scheme. These victims of disgraced financier Bernard Madoff and their supporters were photographed near the New York City courthouse complex in June.

NEW YORK -- A lawyer for victims of Bernard Madoff's Ponzi scheme says the financier told him during a 4 1/2-hour prison interview plenty of details about the fraud, including how it took place and how securities regulators missed catching him.

The San Francisco lawyer, Joseph Cotchett, said he planned to use what he learned Tuesday to add defendants to a lawsuit to be filed in Manhattan this week on behalf of investors harmed by the multibillion-dollar scam.

"It was an extraordinary visit," Cotchett said. "He was very candid, very open, and answered every one of our questions."

Madoff, 71, pleaded guilty in March and was sentenced to 150 years in prison. He was taken two weeks ago to the Butner Federal Correctional Complex, about 45 miles northwest of Raleigh, N.C., where the interview took place.

Cotchett said Madoff repeatedly apologized for the harm he caused victims, about a dozen of whom are represented by Cotchett. The lawyer said he would describe much of what he learned from Madoff in his lawsuit.

Nancy Fineman, a lawyer who works with Cotchett and attended the interview, said Madoff described his meetings with the Securities and Exchange Commission while he was committing the fraud and the fact the SEC was unable to catch him, which didn't seem to surprise him.

Authorities say Madoff cost thousands of investors over several decades at least $13 billion as he told them the money had grown to about $65 billion. By the time he was arrested in December, only several hundred million dollars remained in the accounts of his private investment business.

Madoff and his wife have relinquished more than $100 million in assets, and authorities have identified more than $1 billion in assets that can be distributed to victims, many of them elderly and living in the New York area and Florida.

A lawyer for Madoff was in the room Tuesday as the lawyers asked questions designed to learn if there were new avenues to pursue money to compensate his victims.

Cotchett said Madoff did not believe there was money that was unaccounted for or had not been discovered by investigators.

Still, Cotchett said he believed there was money that hadn't been located, including overseas.

"But it might be in many different venues, and by that I mean I don't think that Bernie knows where all the money is because money was paid out to feeders," he said.

Cotchett said he expected to add to his lawsuit some defendants who worked for those feeder funds that sent clients to Madoff. He said his interview left him thinking that many people were negligent in the Madoff fraud, including the government's watchdog agencies.

The SEC has said no evidence of wrongdoing by its staff has surfaced in connection with its failure to investigate credible claims about Madoff. But the top cop at the SEC resigned after receiving an angry dressing-down before Congress over the agency's failure to detect the massive fraud scheme.

SEC Chairman Mary Schapiro has said the agency has been revamping itself, buttressing enforcement efforts and taking initiatives to protect investors following the Madoff scandal. The agency has undergone fundamental changes in recent months "that will reinforce our focus on investor protection and market integrity," Schapiro told the House Financial Services subcommittee.

Cotchett said he set up the prison visit through Madoff's lawyers and he believed it would be the only visit by victims' lawyers. He said he planned to share what he learned with other attorneys for victims. Madoff lawyer Ira Sorkin declined to comment.

Cotchett said Madoff, whom he described as looking healthy, was "very remorseful."

"I think he's not happy to be where he is, but he's certainly not complaining," the lawyer said. "The guy's facing 150 years. That's a long time for anybody."